Do not underestimate benefits of Gerdau reorganization plan, Fator says

SAO PAULO, July 15 (Reuters) - Investors may be
underestimating the benefits of a reorganization plan at Gerdau
SA that could help the company, the largest
steelmaker in the Americas, spin off its North American unit in
a few years, an analyst at Banco Fator said on Wednesday.

Shares of Gerdau plunged as much as 7 percent on Tuesday
after the announcement of the plan, under which the company
would buy the remaining stakes that it does not won in its units
Gerdau Aços Longos SA, Gerdau Açominas SA, Gerdau Aços
Especiais SA and Gerdau América Latina Participações SA.

According to Artur de Almeida Losnak, Fator's commodities
analyst, the cost of the buyout could be compensated for by
Gerdau's ability to integrate the units and extract cost and
expense savings from the units. "Markets might be failing to see
the long-term benefits of the deal, despite its cost," he added.

The simplification of Gerdau's corporate structure achieved
through the reorganization could also pave the way for
divestments or even a listing of one or more of the business
units, Losnak said, adding this might not happen in the short
term.

In his opinion, the most notable of the business units,
Gerdau North America, could be listed in the future. Gerdau will
now also have separate Brazilian and South American divisions,
along with an existing specialty steel business.

Gerdau said on Tuesday the reorganization was necessary to
make it more competitive. The company declined to comment beyond
the original securities filing.

Shares of Gerdau were up 1.8 percent on Wednesday afternoon
in Sao Paulo, recovering from Tuesday's tumble.